Changes in Reporting of Company Schedule III

Schedule III to the Companies Act, 2013 provides general instructions for presentation of financial statements of a company under both Accounting Standards (AS) and Indian Accounting Standards (Ind AS). Schedule III has three parts and they are as follows:

• Division I is applicable to a company whose financial statements are prepared in accordance with AS
• Division II is applicable to a company whose financial statements are prepared in accordance with Ind AS (other than Non-Banking Financial Companies (NBFCs)
• Division III is applicable only to NBFCs which are required to prepare financial statements in accordance with Ind AS.

The Ministry of Corporate Affairs (MCA) has notified amendments to Schedule III. Let us learn what these amendments are:

• Now companies have to round off the figures appearing in the financial statements. Before this amendment, it was optional. This criteria for rounding off shall be based on “total income” instead of “turnover”.
• Under the heading “II Assets”, under sub-heading “Non-current assets”, after the words “Property, Plant and Equipment”, the words “and Intangible assets” shall be inserted and for the words “Tangible Assets”, the words “Property, Plant and Equipment” shall be substituted
• In the “Notes”, under the heading “General Instructions for Preparation of Balance Sheet”, the company shall disclose Shareholding of Promoters
• Under the heading “F. Short-term borrowings”, after item (iv) and the entries relating thereto, Current maturities of Long-term borrowings shall be disclosed separately
• After the heading “FA. Trade Payables” and the entries relating thereto, Trade Payables ageing schedule and Trade Receivables ageing schedule is to be given.
• Where the company has not used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the balance sheet date, the company shall disclose the details of where they have been used
• The company shall provide the details of all the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) 5 whose title deeds are not held in the name of the company in format given below and where such immovable property is jointly held with others, details are required to be given to the extent of the company’s share.
• Where the Company has revalued its Property, Plant and Equipment, the company shall disclose as to whether the revaluation is based on the valuation by a registered valuer as defined under rule 2 of the Companies (Registered Valuers and Valuation) Rules, 2017.
• Certain disclosures shall be made where Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013,) either severally or jointly with any other person, that are: (a) repayable on demand or (b) without specifying any terms or period of repayment
• Ageing Schedule to be given for Capital-work-in progress
• Intangible assets under development aging schedule to be given.
• Disclosure of any proceedings initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition)Act, 1988 is to be made.
• Where the Company has borrowings from banks or financial institutions on the basis of security of current assets, it shall disclose:
  1. whether quarterly returns or statements of current assets filed by the Company with banks or financial institutions are in agreement with the books of accounts.
  2. if not, summary of reconciliation and reasons of material discrepancies, if any to be adequately disclosed.

• Where a company is a declared wilful defaulter by any bank or financial Institution or other lender, details to be given.
• Where the company has any transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956, the Company shall disclose the details of the same
• Where any charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period, details and reasons thereof shall be disclosed.
• Where the company has not complied with the number of layers prescribed under section 2(87) read with Companies (Restriction on number of Layers) Rules, 2017, the name and CIN of the companies beyond the specified layers and the relationship/extent of holding of the company in such downstream companies shall be disclosed.
• Following Ratios to be disclosed. Also, the company shall explain the items included in numerator and denominator for computing the above ratios. Further explanation shall be provided for any change in the ratio by more than 25% as compared to the preceding year.
  1. Current Ratio
  2. Debt-Equity Ratio
  3. Debt Service Coverage Ratio
  4. Return on Equity Ratio
  5. Inventory turnover ratio
  6. Trade Receivables turnover ratio
  7. Trade payables turnover ratio
  8. Net capital turnover ratio
  9. Net profit ratio
  10. Return on Capital employed
  11. Return on investment.

• Where any Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013, the Company shall disclose that the effect of such Scheme of Arrangements have been accounted for in the books of account of the Company ‘in accordance with the Scheme’ and ‘in accordance with accounting standards and deviation in this regard shall be explained.
• Disclosure of Utilisation of Borrowed funds and share premium to be given

These amendments shall come into effect from 1^st April, 2021.

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